Whole Foods Market’s (Nasdaq: WFMI ) founder and CEO John Mackey is no stranger to controversy. But earlier this week he took a stand on the health-care debate that may make a lot of the organic grocer’s coveted customers choke on their pesticide-free produce.
Thanks a lot, dude!
Mackey has always been outspoken in his views, even if his customers might disagree. For example, given Whole Foods' generally left-leaning clientele, his comparison of unions to herpes many years ago was perhaps a touch incendiary.
And no one can forget the Rahodeb scandal. Mackey's eight years of anonymously defending his store (and his haircut) on the Yahoo! Finance discussion boards didn’t go over too well with the public, much less federal regulators. (I believed it was rotten behavior. My Foolish colleague Rick Munarriz thought it wasn’t the big deal people thought it was. And another longtime Fool, Bill Mann, argued that people should lighten up -- of course the guy has an ego.)
Now, Mackey has published an op-ed in The Wall Street Journal outlining his suggestions for the ongoing health-care reform debate, with a focus on individual empowerment. Some of those who oppose his ideas, or simply favor the policies proposed by the Obama administration, are now calling for a good old-fashioned boycott. (Then again, those impressed by Mackey's views might be more inclined to visit the store now.) Significantly, the type of customers Whole Foods has traditionally targeted are more likely to passionately support the kind of public, universal health coverage Mackey's op-ed argues against.
Given the problems this stance could pose for the company, I'm sure many Whole Foods shareholders are ever so grateful that Mackey felt the need to speak up.
Personally, I support Mackey's public advocacy of alternative ideas. He’s one CEO trying to be part of the solution, not the problem -- and even if they're not delicately phrased, he often makes excellent points.
If anything, General Motors’ bankruptcy shows that Mackey’s quip about unions may have been too kind. Combined with management's own poor decisions, unions' costly and short-sighted demands proved more like a fatal disease to the automaker than an inconvenient and socially embarrassing one. That’s why longtime labor foe Wal-Mart's (NYSE: WMT ) recent decision to team up with unions to support employer mandates practically dripped with irony. Whole Foods, Starbucks (Nasdaq: SBUX ) , and Costco (Nasdaq: COST ) are all good examples of companies that have made it a point to provide employee benefits without coercion.
Here’s another thought: Shouldn't the very people contemplating a Whole Foods boycott on these grounds applaud many of the company's existing initiatives? Are they aware of its progressive, employee-friendly policies? And if so, does this mean they don’t care as much as they think they do?
I mean, really, how dare Whole Foods let employees vote on their benefits, when most retail workers get no benefits whatsoever? The nerve of Mackey, forgoing his base salary and capping management's pay at 19 times that of his lowest-paid employee? What is Whole Foods thinking, donating part of its profits to local and global organizations working to make a positive difference? And giving the majority of its stock options to rank-and-file employees, rather than upper management? That's just diabolical!
Sometimes, trying to be part of the solution seems to challenges some people's assumptions about the way things are supposed to be. Mackey’s belief in conscious capitalism -- a world where responsible, entrepreneurial capitalists try to make things better, not worse, and where we all take greater responsibility for our own decisions -- might challenge some people's long-held assumptions. But it's a great thing to contemplate.
Another angle on "risk tolerance"
As a shareholder and a business analyst, I can't deny that Mackey's very public ideas about the controversial topic of health care reform are risky. With his stakeholder-centric view of business, Mackey knows very well that customers vote with their wallets. Indeed, the company’s stances on environmentalism, sustainability, animal welfare, and other themes all depend upon people giving their patronage to businesses that try to do the right thing.
However, I also suspect that many longtime shareholders know how Mackey rolls, and aren't fazed by dramatic stands like this one. I can't deny the real perils of an outspoken and controversial CEO, but I'd rather take this sort of risk than support the folly that ran companies like AIG (NYSE: AIG ) , Bank of America (NYSE: BAC ) , or Citigroup (NYSE: C ) into the ground.